How feasible is it to start your own development shop?

I don’t disagree- but also partial do. The world of real estate is so huge, and as the world continues to evolve and grow, cities and expectations for real estate and living space will as well. We just had a huge, perspective shifting event in the pandemic, and now an entire product type is in question (office). People now can work from home and the demands for retail and housing are extremely different from 5-10 years ago. I think keep up with trends, be a people person, network, and execute on good ideas as you see them. Build a resume by finding creative opportunities and bringing your earlier connections on board. Still possible to make it absolutely! 

I know of quite a few through my network who have. More quite senior people from large shops made the switch then is usual recently (imo) due to easy access to capital/historically cheap debt. You tend to have different personalities at big shops vs small shops and you have very different learning experiences. This attracts different personalities with different goals, most guys I know looking to start their own shop tend to gravitate to smaller players where you have your fingers in more pies and follow the deal cradle to grave rather than get siloed.

Beyond this it’s really quite ‘simple’ :

1. have equity backing from either savings, family or people in your network (often a mix of all 3)

2. have a personal track record you can speak to which opens up the check books

3. have requisite contacts; land brokers, GCs, architects, debt guys, consultants etc

Then you just start chasing deals. Obviously this is a gross simplification but it isn’t rocket science and if you’ve been running deals for someone else you should know the major risks and have the appetite for it and strategies to mitigate. This is the reality of why most people don’t go out by themselves because they lack the requisite appetite for risk and would rather the stability of a cheque from an employer then swinging for the fences. This becomes more true as people progress through their careers and have families. Which is understandable, the process is not difficult per se but the risk on your first (and really every subsequent) deal is huge, if some boner city planner shoots you down in entitlement you’ll probably lose your life savings and your LPs and be dead in the water.

In summary: Anyone with 7-8 YOE in development likely can start their own developer, but most don’t have the balls to actually do it. Of those who do it many will likely fail. Those that succeed probably hunt humans for sport or some other eccentric obscenely rich person activity.

But what do I know I still get paid biweekly lol

You can definitely do it. The trick in development is getting through entitlement/closing so you can start earning fees. That can take 12-24 months (shorter or longer depending on municipality). The hard part is not necessarily buying deals but having both the cash for entitlement and closing without investors lined up and than having living expenses saved up before the fees start coming in. Once the fees start rolling in, you need more pursuit money and living expenses paid for because you need the fees to pay staff, unless you’re a one-man/woman band, which is fine except you now need to execute…and find your next deal so you can have…fees. It’s a hard hampster wheel. 
 

Personally, while I am a developer and do development management as an employee, if ever start my own firm I would do acquisitions for value add deals first. Once I am cash flowing enough in the business and actually have runway, than I would move to development. Acquisition deals are faster to the fees and promote. The hardest part of starting your business is having the cash flow to float you in the ramp up phase. This is where most people fail as they don’t have enough cash to get them through. Acquisition deals will give you acquisition fees and asset management fees to start building the business and paying yourself. 

So, first... I'd say I pretty much agree with the comments posted above, beyond that... my basic thoughts on the whole "go out on own" concept....

- Because real estate is unique literally by address, it is worlds easier to do "own deals" in this space than in private equity or other investment mngt businesses as you can legit command a site ala monopoly style (this is very much a difference to real estate that few other financial assets offer)

- As said above, having money is the biggest part of doing deals on own (duh right?). BUT,  it's not just the money to fund the equity portion of deal, its also the sponsor/GP portion, the pursuit costs, and even the firm operating costs. Just think of all the expenses your firm pays out to do deals and operate.... salaries, office rent, data subscriptions, meals/travel, etc. plus all the costs of trying to do deals then executing deals. A BIG mistake I see people make (real life and on WSO discussions on the topic tbh) is only thinking in terms of deal (like from standpoint of the model they often do), missing the firm's profit/loss and accounting for deal pursuit costs, etc. 

- To that end, start-ups can either be very very well capitalized (i.e. PE/HWNI backed) or "shoe-stringed" (tbh, don't see the middle ground all that often, but prob exists). The "founders" in the very very well cap'td shops have JOBS, but have equity stakes that could pay off big $$$$ if deals go well and/or firm sells. The shoe-stringed can make bigger $$ on smaller deals due to low costs, but generally have to 'live cheap' in the process (tbh, many I see do this well have either family backing/support and/or working spouse who pays bills). The bottom line is that there is no automatic ticket to riches (unless you are already rich lol), it's just a different path.

- As to the "corporate" life (like you observe of your MDs), impossible for me to speak to your firm and their senior mngt's earnings let alone wealth.... but, clearly top people at big and even medium size developers can make big payouts from successful deals and make seriously salaries and bonuses along the way. This leads the "wealth potential" of such people in their hands in how the invest/save vs. spend. In all reality, execs/seniors from the big name firms will probably retire richer than most "go on owners", BUT that top 10% of go owners will probably be massively richer, but the bottom 50% probably quite a bit poorer (these are my made up numbers to be sure lol). 

So, bottom line, I really have no judgement/advise on this. If I saw an opportunity for a unique entrepreneurial move I would consider (I've worked for smaller start-up types of the very very cap't type and even one 'shoe-string', but now work for large corp devco). BUT.... I have a high bar and really don't see that as needed part of my career/life. IMHO, it's a great and motivating dream/idea to have when younger to the biz, but the reality that you will find the longer you stay in the biz may make you rethink it (I mean, this happens for most clearly).